CPI Aerostructures Inc Stock Downgraded (CVU)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- CPI Aerostructures (AMEX: CVU) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • CPI AEROSTRUCTURES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CPI AEROSTRUCTURES INC reported lower earnings of $0.92 versus $1.39 in the prior year. For the next year, the market is expecting a contraction of 8.7% in earnings ($0.84 versus $0.92).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Aerospace & Defense industry. The net income has significantly decreased by 1763.4% when compared to the same quarter one year ago, falling from $1.79 million to -$29.69 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Aerospace & Defense industry and the overall market, CPI AEROSTRUCTURES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$0.76 million or 166.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • In its most recent trading session, CVU has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

CPI Aerostructures, Inc. is engaged in the contract production of structural aircraft parts for fixed wing aircraft and helicopters in the commercial and defense markets. CPI Aerostructures has a market cap of $88.4 million and is part of the industrial goods sector and aerospace/defense industry. Shares are down 29.1% year to date as of the close of trading on Tuesday.

You can view the full CPI Aerostructures Ratings Report or get investment ideas from our investment research center.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

More from Markets

Asia Markets Fall on Latest Tariff Threats From Trump

Asia Markets Fall on Latest Tariff Threats From Trump

Google Invests in JD.com; Comcast-Disney Battle Nears Head -- ICYMI

Google Invests in JD.com; Comcast-Disney Battle Nears Head -- ICYMI

REPLAY: Jim Cramer on Tariff Worries, Oil, Alphabet and Centene

REPLAY: Jim Cramer on Tariff Worries, Oil, Alphabet and Centene

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes

Dow Drops Over 100 Points on Trade War Worries

Dow Drops Over 100 Points on Trade War Worries